Regional Headquarters, alternatively called Area Headquarters or RHQs, is a kind of business registration that allows foreign corporations to establish communications centers in countries abroad. These centers are allowed to supervise, inspect, or coordinate their branches, subsidiaries, and affiliates all over the world.
It is important to note that these RHQs are not considered separate entities from their parent foreign company. Thus, RHQs are not allowed to generate income from sources to and from the Philippines. It is only limited to its affiliates, branches, and subsidiaries. On that note, liabilities of RHQs will be incurred by the parent foreign company.
While RHQs are not allowed to generate income in the Philippine Economic Zone, they may source raw materials, train employees, conduct research and development, and market or advertise products, but are subject to certain restrictions.
As the Philippines is a gateway to Southeast Asia, it is a prime location for foreign companies looking to set up RHQs. If you are interested in opening an RHQ for your company or are a manager tasked with setting one up, here is what you need to know about how to register an RHQ in the Philippines.
If you need assistance setting up an RHQ, it would be prudent to get help from an accounting firm that offers business registration services. It will make the whole process a lot faster because they have the expertise and experience. Here’s what you need to know about the whole registration process:
1. Secure setup requirements
If you are looking to set up a business in the Philippines as a foreign national, you must first secure the appointment of a resident agent and proof of official business address.
An appointment resident agent is essentially the representative for the RHQ in the Philippines. They receive the summons and legal proceedings served to or against the RHQ in operation. They may either be a Philippine resident or a domestic corporation engaged in lawful business in the country. For example, seeking help from a reputable accounting firm is one way to do it.
Proof or substantiation of the official address is needed, stating the official office address of the RHQ. You must present your Contract of Lease to the Bureau of Internal Revenue (BIR), the Philippines tax collecting body and the Local Government Unit where your office will reside (LGU). Alternatively, if you do not have the Contract of Lease yet, you may rent a virtual office as your business address.
2. Meet minimum capital requirements
RHQs must meet the minimum capital requirement of 50,000 USD, which the parent company must remit to the RHQ yearly in order to cover expenses.
3. Secure registration requirements
The following registration requirements must be secured:
– Application form
– Name Verification Slip
– Certificate from the Philippine Consulate, Embassy, or Philippine Commercial Office, or from the equivalent office of the Department of Trade and Industry in the country of origin of the parent company to verify that the foreign corporation has branches, affiliates, and subsidiaries around the world.
– Proof of remittance of 50,000 USD
– Clearance or endorsement from appropriate agencies
– Endorsement from the Board of Investments
– Authenticated and latest financial statements
4. Register with the Securities and Exchange Commission
After securing all the documents, you must register with the SEC for the issuance of your license to operate as an RHQ. It can be tedious if you’re a foreigner who doesn’t know what to do or where to go, so seeking business registration services can expedite the process and take the stress off of you.
5. Obtain the necessary business permits
The LGU where you wish to put up shop may require additional permits at the local level in compliance with local ordinances. Secure a Barangay Clearance, a Mayor’s Permit, and a Business Permit to Operate.
6. Register with the BIR
As the RHQ will be operational in the Philippines, it must have a corporate tax number. Register with the BIR to obtain this.
7. Considerations when hiring locals
If you will be employing Philippine locals, register as an employer at the following agencies:
– Social Security System (SSS) – for employee retirement and pension funds
– Philippine Health Insurance Corporation (PhilHealth) – for employee health coverage
– Home Development Mutual Fund (Pag-IBIG Fund) – for employee membership to attain benefits and economical home loans
8. Apply for work visas for foreign nationals
If you will be hiring foreign employees, and fielding foreign directors and executives, you need to apply for their Work Visas.
It can be quite tedious to deal with everything on your own, especially if you’re not used to how things are conducted in Philippine government agencies. Instead of dealing with all the hassle, yourself call our team and allow us to leverage our experience to help you out. We offer free 30-minute consultations.